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Exhibit 4.1
AMERICAN MEDIA OPERATIONS, INC.
$250,000,000
10 1/4% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
April 30, 1999
CHASE SECURITIES INC.
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
American Media Operations, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell $250,000,000 aggregate principal amount
of its 10 1/4% Senior Subordinated Notes due 2009 (the "SECURITIES"). The
Securities will be issued pursuant to an Indenture to be dated as of May 7,
1999 (the "INDENTURE") among the Company, the subsidiaries of the Company
listed on the signature pages hereof (collectively, the "GUARANTORS") and The
Chase Manhattan Bank, as trustee (the "TRUSTEE"), and will be guaranteed on an
unsecured senior subordinated basis by the Guarantors. The Company and the
Guarantors hereby confirm their agreement with Chase Securities Inc. ("CSI" or
the "INITIAL PURCHASER") concerning the purchase of the Securities from the
Company by the Initial Purchaser.
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933 (the
"SECURITIES ACT"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated April 13, 1999 (the
"PRELIMINARY OFFERING MEMORANDUM") and will prepare an offering memorandum
dated the date hereof (the "OFFERING MEMORANDUM") setting forth information
concerning the Company and the Securities. Copies of the Preliminary Offering
Memorandum have been, and copies of the Offering Memorandum will be, delivered
by the Company to the Initial Purchaser pursuant to the terms of this
Agreement. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto, unless otherwise noted. The Company hereby confirms that it has
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchaser in accordance with Section 2.
Holders of the Securities (including the Initial Purchaser
and its direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the
Company will agree to file with the Securities and Exchange Commission (the
"COMMISSION") (a) a registration statement under the Securities Act (the
"EXCHANGE OFFER REGISTRATION STATEMENT") registering an issue of senior
subordinated notes of the Company (the "EXCHANGE SECURITIES") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "SHELF REGISTRATION STATEMENT").
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Pursuant to an Agreement and Plan of Merger (the "MERGER
AGREEMENT") dated as of February 16, 1999, between EMP Acquisition Corp., a
company formed by Evercore Capital Partners L.P. ("EVERCORE"), and American
Media, Inc., a Delaware corporation and the Company's parent company
("HOLDINGS"), (a) EMP will be merged with and into Holdings (the "MERGER"), (b)
the existing stockholders of Holdings will receive aggregate cash consideration
of $299.4 million and (c) Evercore and certain other investors (including Mr.
Xxxxx Xxxxxx) will beneficially own 100% of the common stock of Holdings.
Substantially concurrently with the Merger and as part of the financing
therefor, the Company will consummate a debt tender offer (the "Debt Tender
Offer") for its 115/8% Senior Subordinated Notes due 2004. The Securities are
being issued in connection with the Merger.
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
The Company and each of the Guarantors represent and warrant to, and agree
with, the Initial Purchaser on and as of the date hereof and the Closing Date
(as defined in Section 3) that:
(a) Each of the Preliminary Offering Memorandum and
the Offering Memorandum, as of its respective date, did not, and on
the Closing Date the Offering Memorandum will not, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; PROVIDED that the Company and the Guarantors make no
representation or warranty as to information contained in or omitted
from the Preliminary Offering Memorandum or the Offering Memorandum in
reliance upon and in conformity with written information relating to
the Initial Purchaser furnished to the Company by or on behalf of the
Initial Purchaser specifically for use therein (the "INITIAL
PURCHASER'S INFORMATION").
(b) Each of the Preliminary Offering Memorandum and
the Offering Memorandum, as of its respective date, contains all of
the information that, if requested by a prospective purchaser of the
Securities, would be required to be provided to such prospective
purchaser pursuant to Rule 144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and
warranties of the Initial Purchaser contained in Section 2 and its
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Securities to the
Initial Purchaser and the offer, resale and delivery of the Securities
by the Initial Purchaser in the manner contemplated by this Agreement
and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended (the "TRUST INDENTURE ACT").
(d) The Company and each of its subsidiaries have
been duly incorporated and are validly existing as corporations in
good standing under the laws of their
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respective jurisdictions of incorporation, are duly qualified to do
business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in
which they are engaged, except where the failure to so qualify or have
such power or authority would not, singularly or in the aggregate,
have a material adverse effect on the condition (financial or
otherwise), results of operations or business of the Company and its
subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT").
(e) As of the Closing Date, the Company will have an
authorized capitalization as set forth in the Offering Memorandum
under the heading "Capitalization"; and all of the outstanding shares
of capital stock of Holdings and of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable.
All of the outstanding shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and, except with respect to Frontline,
Inc., a Delaware corporation, 80% of the capital stock of which is
owned by the Company, and Biocide, Inc., a Delaware corporation, 80%
of the capital stock of which is owned by the Company, and as
described in the Offering Memorandum under the caption "Description of
Other Indebtedness," are owned directly or indirectly by the Company,
free and clear of any lien, charge, encumbrance, security interest,
restriction upon voting or transfer or any other claim of any third
party. All the capital stock (i) of the Company is owned directly by
Holdings and (ii) of Holdings, after giving effect to the
Transactions, will be owned directly by EMP Group L.L.C., a Delaware
limited liability company (the "LLC"), in each case, except as
described in the Offering Memorandum under the caption "Description of
Other Indebtedness," free and clear of any lien, charge, encumbrance,
security interest, restriction upon voting or transfer or any other
claim of any third party. As of the Closing Date, Evercore has the
power to appoint a majority of the managers of the Board of Managers
of the LLC.
(f) The statements set forth in the Offering
Memorandum under the captions "Summary--The Transactions," "The
Transactions," "Outstanding Voting Securities" and "Certain
Relationships and Related Transactions" insofar as they purport to
describe the documents referred to therein constitute a fair summary
thereof.
(g) Holdings, the Company and the Guarantors each
have or had, as applicable, full right, power and authority to execute
and deliver, as applicable, this Agreement, the Indenture, the
Registration Rights Agreement, the Merger Agreement, the Credit
Agreement dated as of the date hereof among Holdings, the Company, the
lenders thereunder and The Chase Manhattan Bank, as administrative
agent (the "CREDIT AGREEMENT"), and the Securities (collectively, the
"TRANSACTION DOCUMENTS") and to perform their respective obligations
hereunder and thereunder; and all corporate action required to be
taken for the due and proper authorization, execution and delivery of
each of the Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and validly taken.
(h) This Agreement has been duly authorized,
executed and delivered by the Company and each of the Guarantors and
constitutes a valid and legally binding agreement of the Company and
each of the Guarantors.
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(i) The Registration Rights Agreement has been duly
authorized by the Company and each of the Guarantors and, when duly
executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and legally binding agreement
of the Company and each of the Guarantors enforceable against the
Company and each of the Guarantors in accordance with its terms,
except to the extent that (i) such enforceability may be limited by
(A) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (B) general equitable principles (whether
considered in a proceeding in equity or at law) and the discretion of
the court before which any proceeding therefor may be brought and (ii)
any rights to indemnity or contribution thereunder may be limited by
federal or state securities laws or public policy considerations.
(j) The Indenture has been duly authorized by the
Company and each of the Guarantors and, when duly executed and
delivered in accordance with its terms by each of the parties thereto,
will constitute a valid and legally binding agreement of the Company
and each of the Guarantors enforceable against the Company and each of
the Guarantors in accordance with its terms, except to the extent that
such enforceability may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and (ii)
general equitable principles (whether considered in a proceeding in
equity or at law) and the discretion of the court before which any
proceeding therefor may be brought. On the Closing Date, the Indenture
will conform in all material respects to the requirements of the Trust
Indenture Act and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
(k) The Securities have been duly authorized by the
Company and each of the Guarantors and, when duly executed,
authenticated, issued and delivered as provided in the Indenture and
paid for as provided herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations
of the Company, as issuer, and each of the Guarantors, as guarantors,
entitled to the benefits of the Indenture and enforceable against the
Company as issuer, and each of the Guarantors, as guarantors, in
accordance with their terms, except to the extent that such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and (ii)
general equitable principles (whether considered in a proceeding in
equity or at law) and the discretion of the court before which any
proceeding therefor may be brought.
(l) The Merger Agreement has been duly authorized,
executed and delivered by Holdings and constitutes a valid and legally
binding agreement of Holdings enforceable against Holdings in
accordance with its terms, except to the extent that such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and (ii)
general equitable principles (whether considered in a proceeding in
equity or at law) and the discretion of the court before which any
proceeding therefor may be brought.
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(m) The Credit Agreement has been duly authorized,
executed and delivered by Holdings and the Company and constitutes a
valid and legally binding agreement of Holdings and the Company
enforceable against Holdings and the Company in accordance with its
terms, except to the extent that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (ii) general equitable principles (whether
considered in a proceeding in equity or at law) and the discretion of
the court before which any proceeding therefor may be brought.
(n) Each Transaction Document conforms in all
material respects to the description thereof contained in the Offering
Memorandum.
(o) The execution, delivery and performance by the
Company and each of the Guarantors of each of the applicable
Transaction Documents to which each is a party, the issuance,
authentication, sale and delivery of the Securities and compliance by
the Company and each of the Guarantors with the terms thereof and the
consummation of the transactions contemplated by the Transaction
Documents will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any material indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to
which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties or assets; and no consent, approval, authorization
or order of, or filing or registration with, any such court or
arbitrator or governmental agency or body under any such statute,
judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by the Company and each of the
Guarantors of each of the Transaction Documents to which each is a
party, the issuance, authentication, sale and delivery of the
Securities and compliance by the Company and each of the Guarantors
with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents, except for such consents,
approvals, authorizations, filings, registrations or qualifications
(i) which shall have been obtained or made prior to the Closing Date
and (ii) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement.
(p) Xxxxxx Xxxxxxxx LLP ("XXXXXX XXXXXXXX") are
independent certified public accountants with respect to the Company
and its subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public
Accountants ("AICPA") and its interpretations and rulings thereunder.
The historical financial statements (including the related notes)
contained in the Offering Memorandum comply in all material respects
with the requirements applicable to a registration statement on Form
S-1 under the Securities Act (except that certain supporting schedules
are omitted); such financial statements have been prepared in
accordance with generally accepted accounting principles
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consistently applied throughout the periods covered thereby and fairly
present the financial position of the entities purported to be covered
thereby at the respective dates indicated and the results of their
operations and their cash flows for the respective periods indicated;
and the financial information contained in the Offering Memorandum
under the headings "Summary--Summary Historical Financial Data,"
"Capitalization," "Selected Historical Consolidated Financial
Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are derived from the accounting
records of the Company and its subsidiaries and fairly present the
information purported to be shown thereby. The pro forma financial
information contained in the Offering Memorandum under the headings
"Summary--Summary Unaudited Pro Forma Consolidated Financial
Information" and "Unaudited Pro Forma Consolidated Financial
Statements" has been prepared on a basis consistent with the
historical financial statements contained in the Offering Memorandum
(except for the pro forma adjustments specified therein), includes all
material adjustments to the historical financial information required
by Rule 11-02 of Regulation S-X under the Securities Act and the
Exchange Act to reflect the transactions described in the Offering
Memorandum, gives effect to assumptions made on a reasonable basis and
fairly presents the historical and proposed transactions contemplated
by the Offering Memorandum and the Transaction Documents. The other
historical financial and statistical information and data included in
the Offering Memorandum are, in all material respects, fairly
presented.
(q) There are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or
of which any property or assets of the Company or any of its
subsidiaries is the subject which, (i) singularly or in the aggregate,
if determined adversely to the Company or any of its subsidiaries,
could reasonably be expected to have a Material Adverse Effect or (ii)
question the validity or enforceability of any of the Transaction
Documents or any action taken or to be taken pursuant thereto; and to
the best knowledge of the Company, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others.
(r) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any
governmental agency or body which prevents the issuance of the
Securities or suspends the sale of the Securities in any jurisdiction;
no injunction, restraining order or order of any nature by any federal
or state court of competent jurisdiction has been issued with respect
to the Company or any of its subsidiaries which would prevent or
suspend the issuance or sale of the Securities or the use of the
Preliminary Offering Memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to
the best knowledge of the Company and each of the Guarantors,
threatened against or affecting the Company or any of its subsidiaries
before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Securities or
in any manner draw into question the validity or enforceability of any
of the Transaction Documents or any action taken or to be taken
pursuant thereto; and the Company has complied with any and all
requests by any securities authority in any jurisdiction for
additional information to be included in the Preliminary Offering
Memorandum and the Offering Memorandum.
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(s) Neither the Company nor any of its subsidiaries
is (i) in violation of its charter or by-laws, (ii) in default in any
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which it is a party or by which it
is bound or to which any of its property or assets is subject or (iii)
in violation in any respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may
be subject except, in the case of (ii) and (iii), for any such
violation or default that would not, singularly or in the aggregate,
have a Material Adverse Effect.
(t) The Company and each of its subsidiaries possess
all material licenses, certificates, authorizations and permits issued
by, and have made all declarations and filings with, the appropriate
federal, state or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of their respective
properties or the conduct of their respective businesses as described
in the Offering Memorandum, except where the failure to possess or
make the same would not, singularly or in the aggregate, have a
Material Adverse Effect, and neither the Company nor any of its
subsidiaries has received notification of any revocation or
modification of any such license, certificate, authorization or permit
or has any reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary course
except where the revocation or modification of any such license,
certificate, authorization or permit, or the failure to renew any such
license, certificate, authorization or permit, would not, singularly
or in the aggregate, have a Material Adverse Effect.
(u) The Company and each of its subsidiaries have
filed all federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and have paid all
taxes due thereon, and no tax deficiency has been determined adversely
to the Company or any of its subsidiaries which has had (nor does the
Company or any of its subsidiaries have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have) a Material Adverse
Effect.
(v) Neither the Company nor any of its subsidiaries
is (i) an "investment company" or a company "controlled by" an
investment company within the meaning of the Investment Company Act of
1940, as amended (the "INVESTMENT COMPANY ACT"), and the rules and
regulations of the Commission thereunder or (ii) a "holding company"
or a "subsidiary company" of a holding company or an "affiliate"
thereof within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
(w) The Company and each of its subsidiaries have
insurance covering their respective properties, operations, personnel
and businesses, which insurance is in amounts and insures against such
losses and risks as are adequate to protect the Company and its
subsidiaries and their respective businesses. Neither the Company nor
any of its subsidiaries has received notice from any insurer or agent
of such insurer that capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance.
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(x) The Company and each of its subsidiaries own or
possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective businesses;
and the conduct of their respective businesses will not conflict in
any material respect with, and the Company and its subsidiaries have
not received any notice of any claim of conflict with, any such rights
of others.
(y) The Company and each of its subsidiaries have
good and marketable title in fee simple to, or have valid rights to
lease or otherwise use, all items of real and personal property which
are material to the business of the Company and its subsidiaries, in
each case free and clear of all liens, encumbrances, claims and
defects and imperfections of title except those (i) described in the
Offering Memorandum under the caption "Description of Other
Indebtedness," (ii) which do not materially interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries or (iii) could not reasonably be expected to have a
Material Adverse Effect.
(z) No labor disturbance by or dispute with the
employees of the Company or any of its subsidiaries exists or, to the
best knowledge of the Company, is contemplated or threatened.
(aa) No "prohibited transaction" (as defined in
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations
thereunder ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended from time to time (the "CODE")) or "accumulated
funding deficiency" (as defined in Section 302 of ERISA) or any of the
events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of
ERISA has been waived) has occurred with respect to any employee
benefit plan of the Company or any of its subsidiaries which could
reasonably be expected to have a Material Adverse Effect; each such
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; the Company and each of
its subsidiaries have not incurred and do not expect to incur
liability under Title IV of ERISA with respect to the termination of,
or withdrawal from, any pension plan for which the Company or any of
its subsidiaries would have any liability; and each such pension plan
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which could reasonably be
expected to cause the loss of such qualification.
(bb) There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission or
other release of any kind of toxic or other wastes or other hazardous
substances by, due to or caused by the Company or any of its
subsidiaries (or, to the best knowledge of the Company, any other
entity (including any predecessor) for whose acts or omissions the
Company or any of its subsidiaries is or could reasonably be expected
to be liable) upon any of the property now or previously owned or
leased by the Company or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule,
regulation, order, judgment, decree or permit or which would, under
any statute or
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any ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any
violation or liability that could not reasonably be expected to have,
singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; and there has been no
disposal, discharge, emission or other release of any kind onto such
property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to
which the Company or any of the Guarantors has knowledge, except for
any such disposal, discharge, emission or other release of any kind
which could not reasonably be expected to have, singularly or in the
aggregate with all such discharges and other releases, a Material
Adverse Effect.
(cc) Neither the Company nor, to the best knowledge
of the Company and each of the Guarantors, any director, officer,
agent, employee or other person associated with or acting on behalf of
the Company or any of its subsidiaries has (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977; or (iv) made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(dd) On and immediately after the Closing Date, the
Company (after giving effect to the issuance of the Securities and to
the other transactions related thereto as described in the Offering
Memorandum) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular date, that on such date
(i) the present fair market value (or present fair saleable value) of
the assets of the Company is not less than the total amount required
to pay the probable liabilities of the Company on its total existing
debts and liabilities (including contingent liabilities) as they
become absolute and matured, (ii) the Company is able to realize upon
its assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the
normal course of business, (iii) assuming the sale of the Securities
as contemplated by this Agreement and the Offering Memorandum, the
Company is not incurring debts or liabilities beyond its ability to
pay as such debts and liabilities mature and (iv) the Company is not
engaged in any business or transaction, and is not about to engage in
any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which the Company is engaged.
In computing the amount of such contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount that,
in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
(ee) Except as described in the Offering Memorandum,
there are no outstanding subscriptions, rights, warrants, calls or
options to acquire, or instruments convertible into or exchangeable
for, or agreements or understandings with respect to the sale or
issuance of, any shares of capital stock of or other equity or other
ownership interest in Holdings, the Company or any of its subsidiaries
other than those listed on Schedule 2 hereto.
(ff) Neither the Company nor any of its subsidiaries
owns any "margin securities" as that term is defined in Regulation U
of the Board of Governors of the
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Federal Reserve System (the "FEDERAL RESERVE BOARD"), and none of the
proceeds of the sale of the Securities will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security
or for any other purpose which might cause any of the Securities to be
considered a "purpose credit" within the meanings of Regulation T, U
or X of the Federal Reserve Board.
(gg) Neither the Company nor any of its subsidiaries
is a party to any contract, agreement or understanding with any person
that would give rise to a valid claim against the Company or the
Initial Purchaser for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities.
(hh) The Securities satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act.
(ii) None of the Company, any of its affiliates or
any person acting on its or their behalf has engaged or will engage in
any directed selling efforts (as such term is defined in Regulation S
under the Securities Act ("REGULATION S")), and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S to the extent applicable.
(jj) Neither the Company nor any of its affiliates
has, directly or through any agent, sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
such term is defined in the Securities Act), which is or will be
integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities Act.
(kk) None of the Company or any of its affiliates or
any other person acting on its or their behalf has engaged, in
connection with the offering of the Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act.
(ll) There are no securities of the Company or
Holdings registered under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), or listed on a national securities
exchange or quoted in a U.S. automated inter-dealer quotation system
other than the Company's 115/8% Senior Subordinated Notes due 2004 and
Holdings' Class A common stock.
(mm) None of the Company or any of the Guarantors
has taken or will take, directly or indirectly, any action prohibited
by Regulation M under the Exchange Act in connection with the offering
of the Securities.
(nn) No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in the Preliminary Offering Memorandum or the
Offering Memorandum has been made or reaffirmed without a reasonable
basis or has been disclosed other than in good faith.
(oo) The Company and its subsidiaries are
implementing a comprehensive, detailed program to analyze and address
the risk that the computer hardware and
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software used by them may be unable to recognize and properly execute
date-sensitive functions involving certain dates prior to and any
dates after December 31, 1999 (the "YEAR 2000 PROBLEM"), and
reasonably believe that such risk will be remedied on a timely basis
without material expense and will not have a material adverse effect
upon the financial condition and results of operations of the Company
and its subsidiaries, taken as a whole; and the Company believes,
after due inquiry, that each supplier, vendor, customer or financial
service organization used or serviced by the Company and its
subsidiaries has remedied or will remedy on a timely basis the Year
2000 Problem, except to the extent that a failure to remedy by any
such supplier, vendor, customer or financial service organization
would not have a Material Adverse Effect.
(pp) Since the date as of which information is given
in the Offering Memorandum, except as otherwise stated therein, (i)
there has been no material adverse change or any development involving
a prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or management of the
Company or any of the Guarantors, whether or not arising in the
ordinary course of business, (ii) none of the Company or any of the
Guarantors has incurred any material liability or obligation, direct
or contingent, other than in the ordinary course of business, (iii)
none of the Company or any of the Guarantors has entered into any
material transaction other than in the ordinary course of business and
(iv) there has not been any change in the capital stock or long-term
debt of the Company or any of the Guarantors, or any dividend or
distribution of any kind declared, paid or made by the Company or any
of the Guarantors on any class of their respective capital stock.
2. PURCHASE AND RESALE OF THE SECURITIES. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
the Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, $250,000,000 principal amount of Securities at a purchase price equal
to 97.00% of the principal amount thereof. The Company shall not be obligated
to deliver any of the Securities except upon payment for all of the Securities
to be purchased as provided herein.
(b) The Initial Purchaser has advised the Company that it
proposes to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. The Initial
Purchaser represents and warrants to and agrees with the Company and the
Guarantors that (i) it is purchasing the Securities pursuant to a private sale
exempt from registration under the Securities Act, (ii) it has not solicited
offers for, or offered or sold, and will not solicit offers for, or offer or
sell, the Securities by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act ("REGULATION D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it has
solicited and will solicit offers for the Securities only from, and has offered
or sold and will offer, sell or deliver the Securities, as part of their
initial offering, only (A) within the United States to persons whom it
reasonably believes to be qualified institutional buyers ("QUALIFIED
INSTITUTIONAL BUYERS"), as defined in Rule 144A under the Securities Act ("RULE
144A"), or if any such person is buying for one or more institutional accounts
for which such person is acting as fiduciary or agent, only when such person
has represented to it that each such account is a Qualified Institutional Buyer
to whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A and in each case, in transactions in
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accordance with Rule 144A and (B) outside the United States to persons other
than U.S. persons in reliance on Regulation S under the Securities Act
("REGULATION S").
(c) In connection with the offer and sale of Securities in
reliance on Regulation S, the Initial Purchaser represents, warrants and agrees
that:
(i) it has complied and will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells
or delivers Securities or has in its possession or distributed the
Preliminary Offering Memorandum or the Offering Memorandum;
(ii) the Securities have not been registered under the Securities
Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except pursuant to an
exemption from, or in transactions not subject to, the registration
requirements of the Securities Act;
(iii) the Initial Purchaser has offered and sold the Securities,
and will offer and sell the Securities, (A) as part of their
distribution at any time and (B) otherwise until 40 days after the
later of the commencement of the offering of the Securities and the
Closing Date, only in accordance with Regulation S or Rule 144A or any
other available exemption from registration under the Securities Act;
(iv) none of the Initial Purchaser or any of its affiliates or
any other person acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities,
and all such persons have complied and will comply with the offering
restriction requirements of Regulation S;
(v) at or prior to the confirmation of sale of any Securities
sold in reliance on Regulation S, it will have sent to each
distributor, dealer or other person receiving a selling concession,
fee or other remuneration that purchase Securities from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons
(i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement
of the offering of the Securities and the date of original
issuance of the Securities, except in accordance with
Regulation S or Rule 144A or any other available exemption
from registration under the Securities Act. Terms used above
have the meanings given to them by Regulation S"; and
(vi) it has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution of
the Securities, except with its affiliates or with the prior written
consent of the Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation
S.
(d) The Initial Purchaser represents, warrants and agrees that
(i) it has not offered or sold and prior to the date six months after the
Closing Date will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or
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agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995;
(ii) it has complied and will comply with all applicable provisions of the
Financial Services Xxx 0000 and the Public Offers of Securities Regulations
1995 with respect to anything done by it in relation to the Securities in, from
or otherwise involving the United Kingdom; and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Securities to a person who
is of a kind described in Article 11(3) of the Financial Services Xxx 0000
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
(e) The Initial Purchaser agrees that, prior to or simultaneously
with the confirmation of sale by the Initial Purchaser to any purchaser of any
of the Securities purchased by the Initial Purchaser from the Company pursuant
hereto, the Initial Purchaser shall furnish to that purchaser a copy of the
Offering Memorandum (and any amendment or supplement thereto that the Company
shall have furnished to the Initial Purchaser prior to the date of such
confirmation of sale). In addition to the foregoing, the Initial Purchaser
acknowledges and agrees that the Company and, for purposes of the opinions to
be delivered to the Initial Purchaser pursuant to Sections 5(e) and (f),
counsel for the Company and for the Initial Purchaser, respectively, may rely
upon the accuracy of the representations and warranties of the Initial
Purchaser and their compliance with their agreements contained in this Section
2, and the Initial Purchaser hereby consents to such reliance.
(f) The Company and each of the Guarantors acknowledge and agree
that the Initial Purchaser may sell Securities to any affiliate of the Initial
Purchaser and that any such affiliate may sell Securities purchased by it to
the Initial Purchaser.
3. DELIVERY OF AND PAYMENT FOR THE SECURITIES. (a) Delivery
of and payment for the Securities shall be made at the offices of Xxxxxxx
Xxxxxxx & Xxxxxxxx, New York, New York, or at such other place as shall be
agreed upon by the Initial Purchaser and the Company, at 10:00 A.M., New York
City time, on May 7, 1999 or at such other time or date, not later than seven
full business days thereafter, as shall be agreed upon by the Initial Purchaser
and the Company (such date and time of payment and delivery being referred to
herein as the "CLOSING DATE").
(b) On the Closing Date, payment of the purchase price for
the Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior
to the Closing Date or by such other means as the parties hereto shall agree
prior to the Closing Date against delivery to the Initial Purchaser of the
certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligations of the Initial Purchaser hereunder. Upon
delivery, the Securities shall be in global form, registered in such names and
in such denominations as the Initial Purchaser shall have requested in writing
not less than two full business days prior to the Closing Date. The Company
agrees to make one or more global certificates evidencing the Securities
available for inspection by the Initial Purchaser in New York, New York at
least 24 hours prior to the Closing Date.
4. FURTHER AGREEMENTS OF THE COMPANY AND THE GUARANTORS. The
Company and each of the Guarantors agree with the Initial Purchaser:
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(a) to advise the Initial Purchaser promptly and, if
requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the
Offering Memorandum untrue or which requires the making of any
additions to or changes in the Offering Memorandum (as amended or
supplemented from time to time) in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; to advise the Initial Purchaser promptly of any order
preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any
jurisdiction and of the initiation or threatening of any proceeding
for any such purpose; and to use its best efforts to prevent the
issuance of any such order preventing or suspending the use of the
Preliminary Offering Memorandum or the Offering Memorandum or
suspending any such qualification and, if any such suspension is
issued, to obtain the lifting thereof at the earliest possible time;
(b) to furnish promptly to the Initial Purchaser and
counsel for the Initial Purchaser, without charge, as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum (and
any amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to
the Offering Memorandum, to furnish a copy thereof to the Initial
Purchaser and counsel for the Initial Purchaser and not to effect any
such amendment or supplement to which the Initial Purchaser shall
reasonably object by notice to the Company after a reasonable period
to review;
(d) if, at any time prior to completion of the
resale of the Securities by the Initial Purchaser, any event shall
occur or condition exist as a result of which it is necessary, in the
opinion of counsel for the Initial Purchaser or counsel for the
Company, to amend or supplement the Offering Memorandum in order that
the Offering Memorandum will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading,
or if it is necessary to amend or supplement the Offering Memorandum
to comply with applicable law, to promptly prepare such amendment or
supplement as may be necessary to correct such untrue statement or
omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, to furnish to holders of the Securities and
prospective purchasers of the Securities designated by such holders,
upon request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act, unless the Company is then subject to and in
compliance with Section 13 or 15(d) of the Exchange Act (the foregoing
agreement being for the benefit of the holders from time to time of
the Securities and prospective purchasers of the Securities designated
by such holders);
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(f) for so long as the Securities are outstanding,
to furnish to the Initial Purchaser copies of any documents, reports
and information as shall be furnished by the Company to the Trustee or
to the holders of the Securities pursuant to the Indenture or the
Exchange Act or any rule or regulation of the Commission thereunder;
(g) to promptly take from time to time such actions
as the Initial Purchaser may reasonably request to qualify the
Securities for offering and sale under the securities or Blue Sky laws
of such jurisdictions as the Initial Purchaser may designate and to
continue such qualifications in effect for so long as required for the
resale of the Securities; and to arrange for the determination of the
eligibility for investment of the Securities under the laws of such
jurisdictions as the Initial Purchaser may reasonably request;
PROVIDED that the Company and its subsidiaries shall not be obligated
to qualify as foreign corporations in any jurisdiction in which they
are not so qualified or to file a general consent to service of
process in any jurisdiction;
(h) to assist the Initial Purchaser in arranging for
the Securities to be designated Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market securities in accordance
with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL
Market and for the Securities to be eligible for clearance and
settlement through The Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to,
sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as such term is defined in the Securities
Act) which could be integrated with the sale of the Securities in a
manner which would require registration of the Securities under the
Securities Act;
(j) except following the effectiveness of the
Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, not to, and to cause its affiliates not
to, and not to authorize or knowingly permit any person acting on
their behalf to, solicit any offer to buy or offer to sell the
Securities by means of any form of general solicitation or general
advertising within the meaning of Regulation D or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act; and not to offer, sell, contract to sell or otherwise
dispose of, directly or indirectly, any securities under circumstances
where such offer, sale, contract or disposition would cause the
exemption afforded by Section 4(2) of the Securities Act to cease to
be applicable to the offering and sale of the Securities as
contemplated by this Agreement and the Offering Memorandum;
(k) for a period of 90 days from the date of the
Offering Memorandum, not to offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a registration
statement for, or announce any offer, sale, contract for sale of or
other disposition of any debt securities issued or guaranteed by the
Company or any of its subsidiaries (other than the Securities) without
the prior written consent of the Initial Purchaser;
(l) during the period from the Closing Date until
two years after the Closing Date, without the prior written consent of
the Initial Purchaser, not to, and not permit any of its affiliates
(as defined in Rule 144 under the Securities Act) to, resell any
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of the Securities that have been reacquired by them, except for
Securities purchased by the Company or any of its affiliates and
resold in a transaction registered under the Securities Act;
(m) not to, for so long as the Securities are
outstanding, be or become, or be or become owned by, an open-end
investment company, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act, and to not be or become, or be or become owned
by, a closed-end investment company required to be registered, but not
registered thereunder;
(n) in connection with the offering of the
Securities, until the Initial Purchaser shall have notified the
Company of the completion of the resale of the Securities, not to, and
to cause its affiliated purchasers (as defined in Regulation M under
the Exchange Act) not to, either alone or with one or more other
persons, bid for or purchase, for any account in which it or any of
its affiliated purchasers has a beneficial interest, any Securities,
or attempt to induce any person to purchase any Securities; and not
to, and to cause its affiliated purchasers not to, make bids or
purchase for the purpose of creating actual, or apparent, active
trading in or of raising the price of the Securities;
(o) in connection with the offering of the
Securities, to make its officers, employees, independent accountants
and legal counsel reasonably available upon request by the Initial
Purchaser;
(p) to do and perform all things required to be done
and performed by it under this Agreement that are within its control
prior to or after the Closing Date, and to use its best efforts to
satisfy all conditions precedent on its part to the delivery of the
Securities;
(q) except as contemplated by the Offering
Memorandum, to not take any action prior to the execution and delivery
of the Indenture which, if taken after such execution and delivery,
would have violated any of the covenants contained in the Indenture;
(r) to not take any action prior to the Closing Date
which would require the Offering Memorandum to be amended or
supplemented pursuant to Section 4(d);
(s) prior to the Closing Date, not to issue any
press release or other communication directly or indirectly or hold
any press conference with respect to the Company, its condition,
financial or otherwise, or earnings or business affairs (except for
routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and of
which the Initial Purchaser is notified), without the prior written
consent of the Initial Purchaser, which consent shall not be
unreasonably withheld, unless in the judgment of the Company and its
counsel, and after notification to the Initial Purchaser, such press
release or communication is required by law; and
(t) to apply the net proceeds from the sale of the
Securities as set forth in the Offering Memorandum under the heading
"Use of Proceeds".
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5. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The
obligations of the Initial Purchaser hereunder are subject to the accuracy, on
and as of the date hereof and the Closing Date, of the representations and
warranties of the Company and each of the Guarantors contained herein, to the
accuracy of the statements of the Company and each of the Guarantors and their
respective officers made in any certificates delivered pursuant hereto, to the
performance by the Company and each of the Guarantors of their respective
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Offering Memorandum (and any amendments or
supplements thereto) shall have been printed and copies distributed to
the Initial Purchaser as promptly as practicable on or following the
date of this Agreement or at such other date and time as to which the
Initial Purchaser may agree; and no stop order suspending the sale of
the Securities in any jurisdiction shall have been issued and no
proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(b) The Initial Purchaser shall not have discovered
and disclosed to the Company on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the
Initial Purchaser, is material or omits to state any fact which, in
the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal
matters incident to the authorization, form and validity of each of
the Transaction Documents and the Offering Memorandum, and all other
legal matters relating to the Transaction Documents and the
transactions contemplated thereby, shall be satisfactory in all
material respects to the Initial Purchaser, and the Company shall have
furnished to the Initial Purchaser all documents and information that
they or their counsel may reasonably request to enable them to pass
upon such matters.
(d) The Initial Purchaser shall have received true
and correct copies of all agreements entered into in connection with
the Merger, including, without limitation, the Merger Agreement and
the LLC Agreement, as amended through the date hereof.
(e) Xxxxxxx Xxxxxxx & Xxxxxxxx, special counsel to
the Company, and Xxxxxx Xxxxxxxxxxx, general counsel to the Company,
shall have furnished to the Initial Purchaser their respective written
opinions, addressed to the Initial Purchaser and dated the Closing
Date, in form and substance reasonably satisfactory to the Initial
Purchaser, substantially to the effect set forth in Annexes B-1 and
B-2 hereto.
(f) The Initial Purchaser shall have received from
Cravath, Swaine & Xxxxx, counsel for the Initial Purchaser, such
opinion or opinions, dated the Closing Date, with respect to such
matters as the Initial Purchaser may reasonably require, and the
Company shall have furnished to such counsel such documents and
information as they request for the purpose of enabling them to pass
upon such matters.
(g) The Company shall have furnished to the Initial
Purchaser a letter (the "INITIAL LETTER") of Xxxxxx Xxxxxxxx,
addressed to the Initial Purchaser and dated the date hereof, in form
and substance satisfactory to the Initial Purchaser, substantially to
the effect set forth in Annex C hereto.
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(h) The Company shall have furnished to the Initial
Purchaser a letter (the "BRING-DOWN LETTER") of Xxxxxx Xxxxxxxx,
addressed to the Initial Purchaser and dated the Closing Date (i)
confirming that they are independent public accountants with respect
to the Company and its subsidiaries within the meaning of Rule 101 of
the Code of Professional Conduct of the AICPA and its interpretations
and rulings thereunder, (ii) stating, as of the date of the Bring-Down
Letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information
is given in the Offering Memorandum, as of a date not more than three
business days prior to the date of the Bring-Down Letter), that the
conclusions and findings of such accountants with respect to the
financial information and other matters covered by the Initial Letter
are accurate and (iii) confirming in all material respects the
conclusions and findings set forth in the Initial Letter.
(i) The Company and each of the Guarantors shall
have furnished to the Initial Purchaser a certificate, dated the
Closing Date, of their respective chief executive officers and their
respective chief financial officers stating that (i) such officers
have carefully examined the Offering Memorandum, (ii) in their
opinion, the Offering Memorandum, as of its date, did not include any
untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and since the date of the
Offering Memorandum, no event has occurred which should have been set
forth in a supplement or amendment to the Offering Memorandum so that
the Offering Memorandum (as so amended or supplemented) would not
include any untrue statement of a material fact and would not omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (iii) as of
the Closing Date, the representations and warranties of the Company or
the particular Guarantor, as applicable, in this Agreement are true
and correct in all material respects, the Company or the particular
Guarantor, as applicable, has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder on or prior to the Closing Date, and (iv) except for the
Transactions, subsequent to the date of the most recent financial
statements contained in the Offering Memorandum, there has been no
material adverse change in the financial position or results of
operation of the Company or any of its subsidiaries, or any change, or
any development involving a prospective change, in or affecting the
condition (financial or otherwise), results of operations or business
of the Company and its subsidiaries taken as a whole.
(j) The Initial Purchaser shall have received a
counterpart of the Registration Rights Agreement which shall have been
executed and delivered by a duly authorized officer of the Company.
(k) The Indenture shall have been duly executed and
delivered by the Company, the Guarantors and the Trustee, and the
Securities shall have been duly executed and delivered by the Company
and duly authenticated by the Trustee.
(l) The Securities shall have been approved by the
NASD for trading in the PORTAL Market.
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(m) If any event shall have occurred that requires
the Company under Section 4(d) to prepare an amendment or supplement
to the Offering Memorandum, such amendment or supplement shall have
been prepared, the Initial Purchaser shall have been given a
reasonable opportunity to comment thereon, and copies thereof shall
have been delivered to the Initial Purchaser reasonably in advance of
the Closing Date.
(n) There shall not have occurred any invalidation
of Rule 144A under the Securities Act by any court or any withdrawal
or proposed withdrawal of any rule or regulation under the Securities
Act or the Exchange Act by the Commission or any amendment or proposed
amendment thereof by the Commission which in the judgment of the
Initial Purchaser would materially impair the ability of the Initial
Purchaser to purchase, hold or effect resales of the Securities as
contemplated hereby.
(o) Except for the Transactions or as described in
the Offering Memorandum under the captions "Recent Developments,"
subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there
shall not have been any change in the capital stock or long-term debt
or any change, or any development involving a prospective change, in
or affecting the condition (financial or otherwise), results of
operations or business of the Company and its subsidiaries taken as a
whole, the effect of which, in any such case described above, is, in
the judgment of the Initial Purchaser, so material and adverse as to
make it impracticable or inadvisable to proceed with the sale or
delivery of the Securities on the terms and in the manner contemplated
by this Agreement and the Offering Memorandum (exclusive of any
amendment or supplement thereto).
(p) No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued
by any governmental agency or body which would, as of the Closing
Date, prevent the issuance or sale of the Securities; and no
injunction, restraining order or order of any other nature by any
federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance or sale
of the Securities.
(q) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating
accorded the Securities or any of the Company's other debt securities
or preferred stock by any "nationally recognized statistical rating
organization", as such term is defined by the Commission for purposes
of Rule 436(g)(2) of the rules and regulations of the Commission under
the Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Securities or any of the Company's other debt securities
or preferred stock.
(r) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the over-the-counter market shall have been
suspended or limited, or minimum prices shall have been established
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on any such exchange or market by the Commission, by any such exchange
or by any other regulatory body or governmental authority having
jurisdiction, or trading in any securities of the Company on any
exchange or in the over-the-counter market shall have been suspended
or (ii) any moratorium on commercial banking activities shall have
been declared by federal or New York state authorities or (iii) an
outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the
United States shall be such) the effect of which, in the case of this
clause (iv), is, in the judgment of the Initial Purchaser, so material
and adverse as to make it impracticable or inadvisable to proceed with
the sale or the delivery of the Securities on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(s) All conditions to the consummation of the Merger
(including, without limitation, the execution of the Credit Agreement
and the consummation of the Debt Tender Offer), other than the
Offering of the Securities, shall have been satisfied. The Merger, the
Debt Tender Offer and the initial funding under the Credit Agreement
shall be consummated substantially concurrently with the sale of the
Securities hereunder. All conditions to the other Transactions other
than the sale of the Securities shall have been satisfied.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchaser.
6. TERMINATION. The obligations of the Initial Purchaser
hereunder may be terminated by the Initial Purchaser, in their absolute
discretion, by notice given to and received by the Company prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5(n), (o), (p), (q) or (r) shall have occurred and be
continuing.
7. REIMBURSEMENT OF INITIAL PURCHASER'S EXPENSES. If (a) this
Agreement shall have been terminated pursuant to Section 6 (other than pursuant
to Section 5(r)), (b) the Company shall fail to tender the Securities for
delivery to the Initial Purchaser for any reason permitted under this Agreement
(other than by reason of any failure by the Initial Purchaser to comply with
any of its material covenants under this Agreement) or (c) the Initial
Purchaser shall decline to purchase the Securities for any reason permitted
under this Agreement, the Company and the Guarantors shall reimburse the
Initial Purchaser for such out-of-pocket expenses (including reasonable fees
and disbursements of counsel) as shall have been reasonably incurred by the
Initial Purchaser in connection with this Agreement and the proposed purchase
and resale of the Securities.
8. INDEMNIFICATION. (a) The Company and each of the
Guarantors shall jointly and severally indemnify and hold harmless the Initial
Purchaser, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Initial
Purchaser within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 8(a) and Section 9 as
the Initial Purchaser), from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of the Securities), to which the Initial Purchaser may
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become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum
or the Offering Memorandum or in any amendment or supplement thereto or in any
information provided by the Company pursuant to Section 4(e) or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
shall reimburse the Initial Purchaser promptly upon demand for any legal or
other expenses reasonably incurred by that Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that none of the
Company and the Guarantors shall be liable in any such case to the extent that
any such loss, claim, damage, liability or action arises out of, or is based
upon, an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with any
Initial Purchaser's Information; and PROVIDED, FURTHER, that with respect to
any such untrue statement in or omission from the Preliminary Offering
Memorandum, the indemnity agreement contained in this Section 8(a) shall not
inure to the benefit of any such Initial Purchaser to the extent that the sale
to the person asserting any such loss, claim, damage, liability or action was
an initial resale by the Initial Purchaser and any such loss, claim, damage,
liability or action of or with respect to the Initial Purchaser results from
the fact that both (A) to the extent required by applicable law, a copy of the
Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement in or omission from the Preliminary Offering Memorandum was
corrected in the Offering Memorandum unless, in either case, such failure to
deliver the Offering Memorandum was a result of non-compliance by the Company
with Section 4(b).
(b) The Initial Purchaser shall indemnify and hold harmless
the Company, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 8(b) and Section 9 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any
Initial Purchaser's Information, and shall reimburse the Company for any legal
or other expenses reasonably incurred by the Company in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred.
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(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 8(a) or 8(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
PROVIDED, HOWEVER, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 8 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and, PROVIDED, FURTHER, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
PROVIDED, HOWEVER, that an indemnified party shall have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of
such counsel for the indemnified party will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii) the indemnified
party has reasonably concluded (based upon advice of counsel to the indemnified
party) that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, (iii) a conflict or potential conflict exists (based upon
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iv) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to any local counsel) at any one
time for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 8(a) and 8(b),
shall use all reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. No indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such proceeding.
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The obligations of the Company, the Guarantors and the
Initial Purchaser in this Section 8 and in Section 9 are in addition to any
other liability that the Company, the Guarantors or the Initial Purchaser, as
the case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.
9. CONTRIBUTION. If the indemnification provided for in
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability,
or action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the Guarantors on the
one hand and the Initial Purchaser on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Guarantors on the one hand and the
Initial Purchaser on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchaser on the other with respect to such offering shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by or on behalf of the Company and the Guarantors, on the one hand, and the
total discounts and commissions received by the Initial Purchaser with respect
to the Securities purchased under this Agreement, on the other, bear to the
total gross proceeds from the sale of the Securities under this Agreement. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to the Company or information
supplied by the Company and the Guarantors on the one hand or to any Initial
Purchaser's Information on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Guarantors and the Initial
Purchaser agree that it would not be just and equitable if contributions
pursuant to this Section 9 were to be determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 9 shall be deemed to include, for
purposes of this Section 9, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 9, the Initial Purchaser shall not be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by the Initial Purchaser with respect to the Securities purchased by
it under this Agreement exceeds the amount of any damages which such Initial
Purchaser has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
10. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchaser, the
Company, the Guarantors and their respective successors. This Agreement and the
terms and
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provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 8 and 9 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company, the
Guarantors and the Initial Purchaser and in Section 4(e) with respect to
holders and prospective purchasers of the Securities. Nothing in this Agreement
is intended or shall be construed to give any person, other than the persons
referred to in this Section 10, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
11. EXPENSES. The Company and the Guarantors agree with the
Initial Purchaser to pay (a) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Securities and any taxes payable in that
connection; (b) the costs incident to the preparation, printing and
distribution of the Preliminary Offering Memorandum, the Offering Memorandum
and any amendments or supplements thereto; (c) the costs of reproducing and
distributing each of the Transaction Documents; (d) the costs incident to the
preparation, printing and delivery of the certificates evidencing the
Securities, including stamp duties and transfer taxes, if any, payable upon
issuance of the Securities; (e) the fees and expenses of the Company's counsel
and independent accountants; (f) the fees and expenses of qualifying the
Securities under the securities laws of the several jurisdictions as provided
in Section 4(h) and of preparing, printing and distributing Blue Sky Memoranda
(including related fees and expenses of counsel for the Initial Purchaser); (g)
any fees charged by rating agencies for rating the Securities; (h) all expenses
and application fees incurred in connection with the application for the
inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (i) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement which are not otherwise specifically provided for in this Section 11;
PROVIDED, HOWEVER, that (i) except as provided in this Section 11 and Section
7, the Initial Purchaser shall pay its own costs and expenses and (ii) the
Initial Purchaser shall pay the costs of the airplane used for the "road show."
12. SURVIVAL. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company, the
Guarantors and the Initial Purchaser contained in this Agreement or made by or
on behalf of the Company, the Guarantors or the Initial Purchaser pursuant to
this Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancelation of this Agreement or any
investigation made by or on behalf of any of them or any of their respective
affiliates, officers, directors, employees, representatives, agents or
controlling persons.
13. NOTICES, ETC.. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered
or sent by mail or telecopy transmission to Chase Securities Inc., 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxxxx
(telecopier no.: (000) 000-0000); or
(b) if to the Company, shall be delivered or sent by
mail or telecopy transmission to the address of the Company set forth
in the Offering Memorandum, Attention: Chief Financial Officer
(telecopier no.: (000) 000-0000);
PROVIDED that any notice to the Initial Purchaser pursuant to Section 8(c)
shall also be delivered or sent by mail to the Initial Purchaser at its address
set forth on the signature page
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hereof. Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Company shall be entitled to act and rely
upon any request, consent, notice or agreement given or made on behalf of the
Initial Purchaser by CSI.
14. DEFINITION OF TERMS. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.
15. INITIAL PURCHASER'S INFORMATION. The parties hereto
acknowledge and agree that, for all purposes of this Agreement, the Initial
Purchaser's Information consists solely of the following information in the
Preliminary Offering Memorandum and the Offering Memorandum: (a) the last two
bullet points on the front cover page concerning the terms of the offering by
the Initial Purchaser and (b) the statements concerning the Initial Purchaser
contained in the third, ninth, tenth, eleventh and twelfth paragraphs under the
heading "Plan of Distribution."
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
17. COUNTERPARTS. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall each
be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
18. AMENDMENTS. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.
19. HEADINGS. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon
this instrument will become a binding agreement between the Company, the
Guarantors and the Initial Purchaser in accordance with its terms.
Very truly yours,
On behalf of
AMERICAN MEDIA OPERATIONS, INC.,
NATIONAL ENQUIRER, INC., SOM
PUBLISHING, INC., WEEKLY WORLD
NEWS, INC., COUNTRY WEEKLY, INC.,
DISTRIBUTION SERVICES, INC.,
FAIRVIEW PRINTING, INC., NDSI,
INC., HEALTH XTRA, INC., RETAIL
MARKETING NETWORK, INC., BIOCIDE,
INC., AMERICAN MEDIA MARKETING,
INC., and MARKETING SERVICES, INC.,
By /s/ Xxxxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Secretary
STAR EDITORIAL, INC.,
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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Accepted:
CHASE SECURITIES INC.,
By /s/ Xxx Xxxxxxx
-----------------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
0 Xxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
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SCHEDULE 1
Amended and Restated Limited Liability Company Agreement and Investors Rights
Agreement of EMP Group L.L.C., dated as of February 16, 1999, by and among
Evercore Capital Partners, L.P., Circulation, LLC, Chase Equity Associates,
L.P., Tandem Journalism Investments, L.P., BG Media Investors, L.P., Xxxxx X.
Xxxxxx, Xxxxx Xxxxxx and Holdings, and Aetna Life Insurance Company and Capital
Communications CDPQ Inc., each as guarantors.
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ANNEX B-1
Form of Opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx
See attached.
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ANNEX B-2
Form of Opinion of General Counsel for the Company
See attached.
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ANNEX C
Form of Initial Comfort Letter
The Company shall have furnished to the Initial Purchaser a
letter of Xxxxxx Xxxxxxxx, addressed to the Initial Purchaser and dated the
date of the Purchase Agreement, in form and substance satisfactory to the
Initial Purchaser, substantially to the effect set forth below:
(i) they are independent certified public
accountants with respect to the Company within the meaning of Rule 101
of the Code of Professional Conduct of the AICPA and its
interpretations and rulings;
(ii) in their opinion, the audited financial
statements and pro forma financial information included in the
Offering Memorandum and reported on by them comply in form in all
material respects with the accounting requirements of the Exchange Act
and the related published rules and regulations of the Commission
thereunder that would apply to the Offering Memorandum if the Offering
Memorandum were a prospectus included in a registration statement on
Form S-1 under the Securities Act (except that certain supporting
schedules are omitted);
(iii) based upon a reading of the latest unaudited
financial statements made available by the Company, the procedures of
the AICPA for a review of interim financial information as described
in Statement of Auditing Standards No. 71, reading of minutes and
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters and certain other limited
procedures requested by the Initial Purchaser and described in detail
in such letter, nothing has come to their attention that causes them
to believe that (A) any unaudited financial statements included in the
Offering Memorandum do not comply as to form in all material respects
with applicable accounting requirements, (B) any material
modifications should be made to the unaudited financial statements
included in the Offering Memorandum for them to be in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included in the Offering Memorandum or (C) the information included
under the headings "Summary--Summary Historical Financial Data,"
"Capitalization," "Selected Historical Consolidated Financial
Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" is not in conformity with the
disclosure requirements of Regulation S-K that would apply to the
Offering Memorandum if the Offering Memorandum were a prospectus
included in a registration statement on Form S-1 under the Securities
Act;
(iv) based upon the procedures detailed in such
letter with respect to the period subsequent to the date of the last
available balance sheet, including reading of minutes and inquiries of
certain officials of the Company who have responsibility for financial
and accounting matters, nothing has come to their attention that
causes them to believe that (A) at a specified date not more than
three business days prior to the date of such letter, there was any
change in capital stock, increase in long-term debt or decrease in net
current assets as compared with the amounts shown in the
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December 28, 1998 unaudited balance sheet included in the Offering
Memorandum or (B) for the period from December 28, 1998 to a specified
date not more than three business days prior to the date of such
letter, there were any decreases, as compared with the corresponding
period in the preceding year, in net sales, income from operations,
except in all instances for changes, increases or decreases that the
Offering Memorandum discloses have occurred or which are set forth in
such letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Initial Purchaser;
(v) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which
is limited to accounting, financial or statistical information derived
from the general accounting records of the Company) set forth in the
Offering Memorandum agrees with the accounting records of the Company,
excluding any questions of legal interpretation; and
(vi) on the basis of a reading of the unaudited pro
forma financial information included in the Offering Memorandum,
carrying out certain specified procedures, reading of minutes and
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters and proving the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma financial information, nothing
came to their attention which caused them to believe that the pro
forma financial information does not comply in form in all material
respects with the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
information.
